FAMI 6-K
Farmmi, Inc. (FAMI)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the six months ended
Commission File Number:
(Registrant’s name) |
People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.:
Form 20-F ☒ Form 40-F ☐
Incorporation By Reference
This report on Form 6-K is hereby incorporated by reference into the Company’s registration statements on Form S-8 (File No. 333-224463; File No. 333-262696) and Form F-3 (File No. 333-280348) and into each prospectus outstanding under the foregoing registration statements, to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
Explanatory Note:
The Registrant is filing this Report on Form 6-K to report its financial results for the six months ended March 31, 2026 and to discuss its recent corporate developments.
Attached as exhibits to this Report on Form 6-K are:
| (1) | Unaudited Condensed Consolidated Financial Statements and related notes as Exhibit 99.1; |
|
|
|
| (2) | Management’s Discussion and Analysis of Financial Condition and Results of Operations as Exhibit 99.2; |
|
|
|
| (3) | Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T. |
2 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this current report with respect to the Company’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. The Company cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. Therefore, investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.
All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
| 3 |
Exhibit Index:
| ||
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL). |
| 4 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FARMMI, INC. |
| |
|
|
| |
Date: August 27, 2026 | By: | /s/ Yefang Zhang |
|
| Name: | Yefang Zhang |
|
| Title: | Chief Executive Officer |
|
| 5 |
EXHIBIT 99.1
FARMMI, INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2026 AND SEPTEMBER 30, 2025 AND
FOR THE SIX MONTHS ENDED MARCH 31, 2026 AND 2025
| F-1 |
FARMMI, INC.
TABLE OF CONTENTS
|
| Page |
|
| F-1 |
| |
Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and September 30, 2025 |
| F-3 |
|
| F-4 |
| |
| F-5 |
| |
| F-6 |
| |
Notes to Unaudited Condensed Consolidated Financial Statements |
| F-7 |
|
| F-2 |
| Table of Contents |
Farmmi, Inc.
Condensed Consolidated Balance Sheets
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
Assets |
| (unaudited) |
|
| (audited) |
| ||
Current Assets |
|
|
|
|
|
| ||
Cash and restricted cash |
| $ |
|
| $ |
| ||
Accounts receivable, net |
|
|
|
|
|
| ||
Advances to suppliers, net |
|
|
|
|
|
| ||
Note receivable, current portion |
|
|
|
|
|
| ||
Inventories |
|
|
|
|
|
| ||
Due from a related party |
|
|
|
|
|
| ||
Other current assets, net |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Non-Current Assets |
|
|
|
|
|
|
|
|
Note receivable |
|
|
|
|
|
| ||
Right-of-use assets, net |
|
|
|
|
|
| ||
Long-term investments, net |
|
|
|
|
|
| ||
Loan to a third party |
|
|
|
|
|
| ||
Security deposits |
|
|
|
|
|
| ||
Property and equipment, net |
|
|
|
|
|
| ||
Total non-current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total Assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Promissory notes |
|
|
|
|
|
| ||
Accounts payable |
|
|
|
|
|
| ||
Due to related parties |
|
|
|
|
|
| ||
Operating lease liabilities – current |
|
|
|
|
|
| ||
Other current liabilities |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Non-Current Liabilities |
|
|
|
|
|
|
|
|
Long-term loans - non-current portion |
|
|
|
|
|
| ||
Operating lease liabilities – non-current |
|
|
|
|
|
| ||
Total non-current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitment and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
|
|
Class A Ordinary Shares, par value $ |
|
|
|
|
|
| ||
Class B Ordinary Shares, par value $ |
|
|
|
|
|
| ||
Subscription receivable |
|
| ( | ) |
|
|
| |
Additional paid-in capital |
|
|
|
|
|
| ||
Statutory reserve |
|
|
|
|
|
| ||
Accumulated deficits |
|
| ( | ) |
|
| ( | ) |
Accumulated other comprehensive loss |
|
| ( | ) |
|
| ( | ) |
Total Farmmi, Inc.’s shareholders' equity |
|
|
|
|
|
| ||
Noncontrolling interest |
|
| ( | ) |
|
| ( | ) |
Total Shareholders' Equity |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
| Table of Contents |
Farmmi, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
|
| For the Six Months Ended March 31, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
| ||
Sales to third parties |
| $ |
|
| $ |
| ||
Sales to related parties |
|
|
|
|
|
| ||
Revenues |
| $ |
|
| $ |
| ||
Cost of revenues |
|
| ( | ) |
|
| ( | ) |
Gross (loss) profit |
|
| ( | ) |
|
|
| |
Operating expenses |
|
|
|
|
|
|
|
|
(Allowance) reversal of allowance for credit losses |
|
| ( | ) |
|
|
| |
Long-term investment impairment loss |
|
| ( | ) |
|
|
| |
Selling and distribution expenses |
|
| ( | ) |
|
| ( | ) |
General and administrative expenses |
|
| ( | ) |
|
| ( | ) |
Total operating expenses |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| ( | ) |
|
| ( | ) |
Other income, net |
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
| ||
Interest expense |
|
| ( | ) |
|
| ( | ) |
Amortization of debt issuance costs |
|
|
|
|
| ( | ) | |
Loss from equity method investment |
|
|
|
|
| ( | ) | |
Other income, net |
|
|
|
|
|
| ||
Gain on disposal of subsidiaries |
|
|
|
|
|
| ||
Total other income, net |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
| ( | ) |
|
| ( | ) |
Income tax expenses |
|
|
|
|
|
| ||
Net loss |
|
| ( | ) |
|
| ( | ) |
Net loss attributable to non-controlling interest |
|
|
|
|
|
| ||
Net loss attributable to Farmmi, Inc. |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Foreign currency translation difference |
|
|
|
|
| ( | ) | |
Total comprehensive loss |
|
| ( | ) |
|
| ( | ) |
Comprehensive loss attributable to non-controlling interest |
|
|
|
|
|
| ||
Comprehensive loss attributable to Farmmi, Inc. |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
| ||
Diluted |
|
|
|
|
|
| ||
Loss per ordinary share |
|
|
|
|
|
|
|
|
Basic |
| $ | ( | ) |
| $ | ( | ) |
Diluted |
| $ | ( | ) |
| $ | ( | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
| Table of Contents |
Farmmi, Inc.
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months Ended March 31, 2026 and 2025
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
| |||||||||||||||||
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
| Total |
|
|
|
|
| |||||||||||||||
|
| Ordinary shares |
|
| Paid in |
|
| Statutory |
|
| Retained |
|
| Comprehensive |
|
| Shareholders’ |
|
| Noncontrolling |
|
| Total |
| ||||||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Reserve |
|
| Earnings |
|
| Income (loss) |
|
| Equity |
|
| Interest |
|
| Equity |
| |||||||||
Balance as of September 30, 2024 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares for promissory notes redemption |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Issuance of ordinary shares for warrants exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Reverse share-split adjustment |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Foreign currency translation loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |||||
Disposal of subsidiaries |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net loss for the period |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2025 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
|
| Class A Ordinary Shares |
|
| Class B Ordinary Shares |
|
| Subscription |
|
| Additional Paid in |
|
| Statutory |
|
| Retained Earnings (Accumulated |
|
| Accumulated Other Comprehensive |
|
| Total Farmmi, Inc.’s Shareholders’ |
|
| Noncontrolling |
|
| Total |
| ||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Receivable |
|
| Capital* |
|
| Reserve |
|
| Deficits) |
|
| loss |
|
| Equity |
|
| Interest |
|
| Equity |
| ||||||||||||
Balance as of September 30, 2025 |
|
|
|
| $ |
|
|
| - |
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of par value effect |
|
| - |
|
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Issuance of ordinary shares for warrants exercised |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Reclassification of Class A shares to Class B Shares |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Foreign currency translation gain |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net loss for the period |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-5 |
| Table of Contents |
Farmmi, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
|
| For the Six Months Ended March 31, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Cash flows from operating activities |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Changes in allowances - accounts receivable |
|
| ( | ) |
|
| ( | ) |
Changes in allowances - advances to suppliers |
|
|
|
|
|
| ||
Changes in allowances - other current assets |
|
|
|
|
|
| ||
Long-term investment impairment loss |
|
|
|
|
|
| ||
Depreciation |
|
|
|
|
|
| ||
Amortization of operating lease right-of-use assets |
|
|
|
|
|
| ||
Loss on short-term investment |
|
|
|
|
|
| ||
Loss from disposal of subsidiaries |
|
|
|
|
| ( | ) | |
Amortization of debt issuance costs |
|
|
|
|
|
| ||
Interest expenses for promissory note redemption |
|
|
|
|
|
| ||
Amortization of biological assets |
|
|
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
| ( | ) |
|
| ( | ) |
Advances to suppliers, net |
|
| ( | ) |
|
|
| |
Note receivable |
|
|
|
|
|
| ||
Inventories, net |
|
|
|
|
|
| ||
Other current assets |
|
| ( | ) |
|
|
| |
Other non-current assets - security deposits |
|
|
|
|
|
| ||
Accounts payable |
|
|
|
|
|
| ||
Operating lease liabilities |
|
| ( | ) |
|
| ( | ) |
Other current liabilities |
|
|
|
|
|
| ||
Net cash (used in) provided by operating activities |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
| ( | ) |
|
| ( | ) |
Proceeds from disposal of subsidiaries, net of cash |
|
|
|
|
| ( | ) | |
Purchase of long-term investments |
|
|
|
|
| ( | ) | |
Loan to a third party |
|
| ( | ) |
|
|
| |
Repayment of loan to a third party |
|
|
|
|
|
| ||
Net cash used in investing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Repayment of promissory notes |
|
|
|
|
| ( | ) | |
Borrowings from a third-party loan |
|
|
|
|
|
| ||
Repayment of a third-party loan |
|
| ( | ) |
|
| ( | ) |
Proceeds from issuance of ordinary shares for warrants exercised |
|
|
|
|
|
| ||
Due from a related party |
|
| ( | ) |
|
| ( | ) |
Proceeds from advances from related parties |
|
|
|
|
|
| ||
Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
|
|
| ( | ) | |
Net (decrease) increase in cash |
|
| ( | ) |
|
|
| |
Cash and restricted cash, beginning of period |
|
|
|
|
|
| ||
Cash and restricted cash, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Representing: |
|
|
|
|
|
|
|
|
Cash, end of period |
| $ |
|
| $ |
| ||
Restricted cash, end of period |
|
|
|
|
|
| ||
Total cash and restricted cash, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental disclosure information: |
|
|
|
|
|
|
|
|
Income taxes paid |
|
|
|
|
|
| ||
Interest paid |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Non-cash financing activities |
|
|
|
|
|
|
|
|
Acquisition of long-term investment through issuance of note receivable |
|
|
|
| $ |
| ||
Issuance of ordinary shares for promissory notes redemption |
|
|
|
| $ |
| ||
Accrued interest in promissory notes |
|
|
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-6 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and nature of business
Farmmi, Inc. (“FAMI” or the “Company”) is a holding company incorporated under the laws of the Cayman Islands on July 28, 2015. FAMI owns
Farmmi Enterprise owns
Farmmi Supply Chain owns
Farmmi Health Development owns
On July 13, 2022, Farmmi Canada Inc. (Farmmi Canada) was established under the laws of Canada. Farmmi Inc. owns
On July 23, 2024, SuppChains Group Inc (“SuppChains”) was established under the laws of the State of California. Farmmi USA owns
On October 31, 2024, Suppchains Transport Inc (“Suppchains Transport”) was established under the laws of the State of California. SuppChains owns
On November 4, 2024, Zhejiang Famimi Biotechnology Co., Ltd (“Famimi Biotech”) was established under the laws of PRC, where Zhejiang Suyuan Agricultural owns
In March 2025, the Company internally reorganized its subsidiaries. After reorganization, Yitang Mediservice owns
On March 31, 2025, an agreement was signed to divest
In June 2025, agreements were signed to divest
On August 6, 2025, Suppchains Oak Inc (“Suppchains Oak”) was established under the laws of the State of New Jersey, the United States of America. Suppchains Transport owns
On January 13, 2026, Bluesage Marketing Inc (“Bluesage”) was established under the laws of the State of California, the United States of America. Farmmi USA owns
| F-7 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and nature of business (continued)
As of March 31, 2026, details of the subsidiaries of FAMI are set out below:
Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal activities |
FAMI | Parent | |||
Farmmi International | ||||
Farmmi Enterprise | ||||
Farmmi Health Development | ||||
Zhejiang Suyuan Agricultural | ||||
Farmmi Eco Agri | ||||
Farmmi E-Commerce | ||||
Farmmi Healthcare | ||||
Yitang Mediservice | ||||
Yiting Meditech | ||||
Jiangxi Xiangbo | ||||
Yudu Yada | ||||
Farmmi USA | ||||
SuppChains | ||||
Suppchains Transport | ||||
Suppchains Oak | ||||
Bluesage |
| F-8 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Liquidity
In assessing the Company’s liquidity and substantial doubt about its ability to continue as a going concern, the Company monitors and analyzes cash on-hand and operating expenditure commitments. The Company’s liquidity needs are to meet working capital requirements and operating expense obligations. To date, the Company financed its operations primarily through cash generated by operating activities, issuance of promissory notes, and issuance of ordinary shares.
The accompanying unaudited condensed consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying unaudited condensed financial statements have been prepared on a basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company recorded net loss of approximately $
Management plans to address the conditions that raise substantial doubt about the Company’s ability to continue as a going concern through (i) obtaining additional equity or debt financing and (ii) reducing cash used in operating activities. The Company may, however, need additional capital in the future to fund its further expansion. If the Company determines that its cash requirements exceed the amount of cash it has on hand at the time, the Company may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to shareholders of the Company.
As a result, the Company prepared the unaudited condensed consolidated financial statements assuming the Company will continue as a going concern. However, there is no assurance that the measures above can be achieved as planned. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Summary of significant accounting policies
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal years ended September 30, 2025 and 2024. Operating results for the six months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026.
The unaudited condensed consolidated financial statements of the Company reflect the principal activities of the Company’s main operating subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.
| F-9 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Use of estimates
In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include allowance for credit losses for accounts receivable, advances to suppliers, note receivable, and security deposits, the valuation of inventories, the impairment of long-term investments and right-of-use assets, the useful lives of property and equipment, and the valuation of deferred tax assets. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash
Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. Cash balances are in bank accounts in the People’s Republic of China and the United States of America. Cash maintained in banks within the PRC of less than RMB 0.5 million (equivalent to $
Accounts and note receivable, net
Accounts and note receivable are presented with net of an allowance for credit losses. The Company maintains an allowance for credit losses for estimated losses. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s payment history and current credit-worthiness, and current economic trends. Accounts are written off after efforts at collection prove unsuccessful.
Advances to suppliers, net
Advances to suppliers represent prepayments made to ensure continuous high-quality supplies and favorable purchase prices for premium quality. These advances are directly related to the purchases of raw materials used to fulfill sales orders. The Company is required from time to time to make cash advances when placing its purchase orders. These advances are settled upon suppliers delivering raw materials to the Company when the transfer of ownership occurs. The Company reviews its advances to suppliers on a periodic basis and makes general and specific allowances when there is doubt as to the ability of a supplier to provide supplies to the Company or refund an advance.
| F-10 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Inventories, net
The Company values its inventories at the lower of cost, determined on a weighted average basis, or net realizable value. The Company reviews its inventories periodically to determine if any reserves are necessary for potential obsolescence or if the carrying value exceeds net realizable value.
Long-term investments
The Company’s long-term investments consist of equity method investments.
Investments in entities over which the Company has the ability to exercise significant influence, but does not have a controlling financial interest, are accounted for using the equity method of accounting. Under the equity method, the Company initially records its investment at cost and subsequently recognizes its proportionate share of the investee’s net income or loss. The Company evaluates its equity method investments for impairment when events or circumstances indicate that a decrease in value below the carrying amount is other than temporary. If such a decline is determined to be other than temporary, an impairment loss is recognized to write the investment down to its fair value.
As of March 31, 2026 and September 30, 2025, the Company evaluated its investments, taking into consideration, including, but not limited to, the duration, degree and causes of the decline in financial results, its intent and ability to hold the investment and the invested companies’ financial performance and near-term prospects. During the six months ended March 31, 2026, the Company recognized an impairment loss of approximately $
The Company’s long-term investments are equity method investments. Investee companies over which the Company has the ability to exercise significant influence but does not have a controlling interest through investment in ordinary shares or in-substance ordinary shares are accounted for using the equity method. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock of the investee between 20% and 50%, and other factors, such as representation on the investee’s board of directors, voting rights and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate.
Under the equity method, the Company initially records its investment at cost and subsequently recognizes the Company’s proportionate share of each equity investee’s net income or loss after the date of investment into net loss and accordingly adjusts the carrying amount of the investment. The Company reviews its equity method investments for impairment whenever an event or circumstance indicates that any other-than-temporary impairment has occurred. The Company considers available quantitative and qualitative evidence in evaluating potential impairment of its equity method investment.
An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. As of March 31, 2026 and September 30, 2025, the cumulative impairment for long-term investments was approximately $
| F-11 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use.
Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets. The estimated useful lives for significant property and equipment are as follows:
Machinery and equipment |
|
| |
Transportation equipment |
|
| |
Office equipment |
|
|
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized.
Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
| F-12 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Revenue recognition
The Company follows ASU 2014-09 Revenue from Contracts with Customers (“ASC Topic 606”). In accordance with ASC 606, to determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligation(s) in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligation(s) in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The Company’s principal businesses are (i) processing, distributing, and trading dried Shiitake mushrooms, Mu Er (also known as Auricularia heimuer or black ear fungus), other edible fungi, and other agricultural products (e.g., tapioca, corn, cotton, and cornstarch), and (ii) providing warehousing and logistics services (including operation services, outbound delivery services, storage services, and special work order services).
Revenue from trading and sales of agricultural products (including dried Shiitake mushrooms, Mu Er, and other edible fungi), operation services, and special work order services
The Company enters into contracts with customers as a principal and primary obligator and has the discretion to determine prices and vendors. Each contract contains one performance obligation, which is transferring the product(s) or service(s) to the Company’s customer in exchange for consideration. The terms of pricing and payment stipulated in the contract are fixed. Usually, the Company requires certain customers to pay in advance or offers a credit term within six months for business customers with good credit worthiness. The Company recognizes revenue at the point in time when the control of the product(s) or service(s) has been transferred to the customer. The transfer of control is considered complete when the product(s) or service(s) have been accepted and received by the customer.
Revenue from outbound delivery and storage services
The Company enters into contracts with customers as a principal and primary obligator and has the discretion to determine prices and vendors. Outbound delivery and storage services are considered distinct services that are recognized over time when the performance obligations have been provided. Outbound delivery services are performed by the Company for the customers generally from shipment pickup to delivery. Storage services are recognized over the duration of the storage contractual period.
Contract balances and remaining performance obligations
The Company’s contract liabilities primarily include advances from customers. As of March 31, 2026 and September 30, 2025, the contract liabilities are $
Cost of revenues
Cost of revenues includes cost of raw materials purchased, inbound freight cost, cost of direct labor, depreciation expense, and other overhead.
| F-13 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Earnings (loss) per share
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, Earnings per Share (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
The components of basic and diluted EPS were as follows:
Six months ended March 31, |
| 2026 |
|
| 2025 |
| ||
Net loss available for ordinary shareholders (A) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Weighted average outstanding ordinary shares (B) |
|
|
|
|
|
|
|
|
- basic |
|
|
|
|
|
| ||
- diluted |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Loss per ordinary share - basic (A/B) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Loss per ordinary share - diluted (A/B) |
| $ | ( | ) |
| $ | ( | ) |
Securities that could potentially dilute earnings per share in the future that were not included in the computation of diluted earnings per share for the six months ended March 31, 2026, and 2025 are as follows:
|
| As of |
|
| As of |
| ||
|
| March 31 |
|
| March 31 |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (unaudited) |
| ||
Warrants to purchase ordinary shares |
|
|
|
|
|
| ||
| F-14 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Fair value of financial instruments
The FASB ASC Topic 820, Fair Value Measurements, defines fair value, establishes a three-level valuation hierarchy for fair value measurements, and enhances disclosure requirements.
The three levels are defined as follows:
Level 1 — Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.
Level 3 — Inputs to the valuation methodology are unobservable.
Unless otherwise disclosed, the carrying amounts of the Company’s financial instruments, including cash and restricted cash, accounts receivable, note receivable, loan to a third party, accounts payable, amounts due to and from related parties, promissory notes and long-term loans, approximate their fair values due to their short-term nature or because the applicable interest rates approximate market rates.
| F-15 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Concentrations of credit risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable, note receivable, and advances to suppliers. As of March 31, 2026 and September 30, 2025, $
Comprehensive income (loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains, and losses that under U.S. GAAP are recorded as an element of stockholders’ equity but are excluded from net income (loss). Other comprehensive income (loss) consists of foreign currency translation adjustment from the Company not using the U.S. dollar as its functional currency.
Leases
The Company accounts for leases following ASC 842, Leases (“Topic 842”).
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and includes initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for minimum lease payments are recognized on a straight-line basis over the lease term.
The Company has elected the practical expedient to account for lease and associated non-lease components as a single lease component.
The Company evaluates the impairment of its right-of-use assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. As of March 31, 2026 and September 30, 2025, the Company did not have any impairment loss for its operating lease right-of-use assets.
| F-16 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Foreign currency translation
The Company’s financial information is presented in U.S. dollars (“USD”). The functional currency of the Company is the Chinese Yuan Renminbi (“RMB”), the currency of the PRC. Any transactions which are denominated in currencies other than RMB are translated into RMB at the exchange rate quoted by the People’s Bank of China prevailing at the dates of the transactions, and exchange gains and losses are included in the statements of operations as foreign currency transaction gain or loss. The unaudited condensed consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC 830, Foreign Currency Matters. The financial information is first prepared in RMB and then translated into U.S. dollars at period-end exchange rates for assets and liabilities and average exchange rates for revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occur. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
The exchange rates in effect as of March 31, 2026 and September 30, 2025 were US$1 for RMB
Shipping and handling expenses
All shipping and handling costs are expensed as incurred and included in selling expenses. Total shipping and handling expenses were $
| F-17 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Value added tax
The Company is generally subject to the value added tax (“VAT”) for selling merchandise. Before May 1, 2018, the applicable VAT rate was
Income taxes
The Company’s subsidiaries in PRC are subject to the income tax laws of the PRC, and subsidiaries in the United States of America are subject to income tax laws of the United States of America. The Company accounts for income taxes in accordance with ASC 740, Income Taxes. ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits or not be deductible in the future.
ASC 740-10-25 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. It also provides guidance on the recognition of income tax assets and liabilities, classification accounting for interest and penalties associated with tax positions, years open for tax examination, accounting for income taxes in interim periods, and income tax disclosures. There were no material uncertain tax positions as of March 31, 2026 and September 30, 2025. As of March 31, 2026, the tax years ended December 31, 2015 through December 31, 2025 for the Company’s subsidiaries remain open for statutory examination by PRC and USA tax authorities.
Statement of Cash Flows
In accordance with ASC 230, Statement of Cash Flows, cash flows from the Company’s operations are formulated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
| F-18 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Risks and uncertainties
The operations of the Company are located in the PRC and U.S. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, in addition to the general state of the PRC and U.S. economies. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC and U.S. and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
The Company’s sales, purchases, and expense transactions are denominated in RMB, and a substantial part of the Company’s assets and liabilities are also denominated in RMB. RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China, the central bank of China. Remittances in currencies other than RMB may require certain supporting documentation in order to affect the remittance.
The Company’s operating entities do not carry any business interruption insurance, product liability insurance, or any other insurance policy except for a limited property insurance policy. As a result, the Company may incur uninsured losses, increasing the possibility that investors would lose their entire investment in the Company.
The Company’s business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company’s operations.
| F-19 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Recent accounting pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 with early adoption permitted. This ASU may be applied either on a prospective or retrospective basis. We are currently evaluating the impact of this standard on our disclosures.
In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), which clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of Update 2024-03 is permitted.
In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a customer, which clarifies the accounting for share-based consideration payable to customers. The amendments are effective for the Company beginning October 1, 2027, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the accounting for internal-use software costs by removing the prescriptive project-stage guidance and establishing updated criteria for determining when software development costs should be capitalized. The amendments also update certain disclosure requirements and supersede the existing website development cost guidance. The amendments are effective for the Company beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-07, “Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract.” The amendments refine the scope of derivative accounting for certain contracts and clarify the accounting for share-based noncash consideration received from customers under Topic 606. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, “Financial Instruments—Credit Losses (Topic 326): Purchased Loans,” which expands the population of acquired loans subject to the gross-up approach under Topic 326. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements,” which expands and clarifies the application of hedge accounting for certain cash flow hedges, nonfinancial components, net written options, and certain foreign currency and interest rate hedging relationships. The amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, “Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities,” which establishes recognition, measurement, presentation, and disclosure requirements for government grants received by business entities, including grants related to assets and income. The amendments are effective for annual reporting periods beginning after December 15, 2028, including interim reporting periods within those annual reporting periods, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements,” which clarifies interim disclosure requirements, the applicability of Topic 270, and the form and content of interim financial statements, and establishes a disclosure principle for material events occurring since the end of the most recent annual reporting period. The amendments are effective for public business entities for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its interim financial reporting and disclosures.
In December 2025, the FASB issued ASU 2025-12, “Codification Improvements,” which makes various amendments to the Accounting Standards Codification to clarify guidance, correct unintended applications, and improve consistency. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In April 2026, the FASB issued ASU 2026-01, “Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock,” which provides guidance for the initial measurement of paid-in-kind dividends on equity-classified preferred stock. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818),” which establishes accounting and disclosure requirements for environmental credits and obligations arising from environmental credit regulatory compliance programs. For public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial position, statements of operations, cash flows, and disclosures.
| F-20 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3 — Accounts receivable, net
Accounts receivable consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Accounts receivable |
| $ |
|
| $ |
| ||
Less: allowance for credit losses |
|
| ( | ) |
|
| ( | ) |
Accounts receivable, net |
| $ |
|
| $ |
| ||
Allowance for credit losses of approximately $
The movement of allowance for credit losses was as follows:
|
| For the Six |
|
| For the |
| ||
|
| Months Ended |
|
| Year Ended |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Balance as of beginning of period |
| $ |
|
| $ |
| ||
(Reversal of) allowance for credit losses |
|
| ( | ) |
|
|
| |
Translation adjustments |
|
|
|
|
|
| ||
Balance as of end of period |
| $ |
|
| $ |
| ||
Note 4 — Advances to suppliers, net
Advances to suppliers consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
Advances to suppliers: |
| (unaudited) |
|
| (audited) |
| ||
Qingyuan Nongbang Mushroom Industry Co., Ltd |
| $ |
|
| $ |
| ||
Jingning Liannong Trading Co., Ltd |
|
|
|
|
|
| ||
Lishui Zhelin Trading Co., Ltd |
|
|
|
|
|
| ||
Others |
|
|
|
|
|
| ||
Sub-total |
| $ |
|
| $ |
| ||
Less: allowance for credit losses |
|
| ( | ) |
|
| ( | ) |
Advances to suppliers, net |
| $ |
|
| $ |
| ||
| F-21 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The movement of allowance for impairment loss was as follows:
|
| For the Six |
|
| For the |
| ||
|
| Months Ended |
|
| Year Ended |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Balance as of beginning of period |
| $ |
|
|
|
| ||
Additions |
|
|
|
|
|
| ||
Translation adjustments |
|
|
|
|
|
| ||
Balance as of end of period |
| $ |
|
| $ |
| ||
On April 1, 2016, the Company entered into two separate framework supply agreements (“Framework Agreements”) with two co-operatives, Jingning Liannong Trading Co., Ltd (“JLT”) and Qingyuan Nongbang Mushroom Industry Co., Ltd (“QNMI”). These two Framework Agreements were renewed for another three years in April 2019 upon expiration and were further renewed for another three years in June 2021. Jingning County and Qingyuan County, where JLT and QNMI are located, produce premium Shiitake and Mu Er.
On April 1, 2020, the Company signed a framework cooperation agreement with Lishui Zhelin Trading Co., Ltd. (“Zhelin Trade”), which is valid for four years. Zhelin Trade is located in the agricultural product distribution center in Liandu District - Southwest Zhejiang Agricultural Trade City, which has convenient logistics and timely agricultural product information. Therefore, the cooperation agreement stipulates that Zhelin Trade will process and deliver edible mushroom products on behalf of Zhelin Trade, and the Company is required to make advance payment to ensure the timeliness of goods supply and delivery.
Many competitors of the Company and other large buyers go to family farms and co-operatives to source their supplies. Family farms and co-operatives traditionally request advance payments to secure supplies. By making advance payments to these suppliers, the Company is also able to lock in a more favorable price for premium quality than would be available in the open market.
The Framework Agreements only provide general guidelines. Actual prices are negotiated and agreed upon in individual purchase orders and are typically set at market prices based on the quality grade and quantities determined and agreed with the suppliers. Prices may vary based on market demand, crop condition, etc. The Company can generally secure the premium quality raw material supplies at prices slightly higher than the typical market prices for average quality raw materials. The quality of supplies must meet standardized specifications of both the mushroom industry and standards set by the Company.
The Company advances certain initial payments based on its estimated purchase plan from these suppliers and additional advances based on individual purchase orders placed. The Company pays advances solely to secure an adequate supply of dried mushrooms to meet its sales demands. The Company’s purchase orders require that the advances shall be refunded by suppliers if they fail to produce the contracted volume of dried mushrooms or fail to deliver supplies to the Company timely.
Advances to suppliers are carried at cost and evaluated for recoverability. The realizability evaluation process is similar to that of the lower of cost or net realizable value evaluation process for inventories. The Company periodically evaluates its advances for recoverability by monitoring suppliers’ ability to deliver a sufficient supply of mushrooms as well as current crop and market condition. This includes analyzing historical quantity and quality of production with monitoring of crop information provided by the Company’s field personnel related to weather or disaster or any other reason. If for any reason the Company believes that it will not receive supplies of the contracted volumes, the Company will assess its advances for any likelihood of recoverability and adjust advances on its financial statements at the lower of cost or estimated recoverable amounts. The advances are made primarily to these suppliers, which are co-operatives formed by many family farms, with which the Company has had long-term relationships over the years. If any of these family farms fail to deliver supplies, the Company would expect to receive a refund of the advances through these suppliers. The Company accrues for any allowance for possible loss on advances when there is doubt as to the collectability of the refund.
During the six months ended March 31, 2026, the Company recognized an additional allowance of approximately $
| F-22 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 5 — Note receivable
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Note receivable, current portion |
| $ |
|
| $ |
| ||
Note receivable, non-current portion |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
On February 28, 2025, Farmmi International Limited (“Farmmi International” or the “Buyer”), a wholly-owned subsidiary of Farmmi, Inc. (the “Company”), entered into an equity transfer agreement with Malong Limited, a Hong Kong company (the “Seller”) to acquire
Pursuant to the agreement, Farmmi International would pay a total purchase price of RMB723,324,150 ($
Both parties agree that
Both parties agree that
(1) The repayment period is two (
(2) Interest is calculated at an annualized rate of
(3) The principal is to be repaid every six months, with the specific time and amount as follows:
From February 1, 2026 to July 30, 2026, a total of no less than
From August 1, 2026 to January 30, 2027, a total of no less than
From February 1, 2027 to July 30, 2027, a total of no less than
From August 1, 2027 to January 30, 2028, the balance to be settled during this period.
| F-23 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6 — Inventories
Inventories consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Finished goods |
|
|
|
| $ |
| ||
Inventories |
|
|
|
| $ |
| ||
As of March 31, 2026 and September 30, 2025, allowance for inventory reserve was nil and nil, respectively.
Note 7 — Other current assets
Other current assets consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Security deposits |
| $ |
|
| $ |
| ||
Advances to third parties |
|
|
|
|
|
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Prepaid value-added tax |
|
|
|
|
|
| ||
Sub-total |
|
|
|
|
|
| ||
Less: allowance for credit losses |
|
| ( | ) |
|
| ( | ) |
Other current assets, net |
| $ |
|
| $ |
| ||
The movement of allowance for credit losses was as follows:
|
| For the Six |
|
| For the |
| ||
|
| Months Ended |
|
| Year Ended |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Balance as of beginning of period |
| $ |
|
|
|
| ||
Additions |
|
|
|
|
|
| ||
Translation adjustments |
|
|
|
|
|
| ||
Balance as of end of period |
| $ |
|
| $ |
| ||
| F-24 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 8 — Long-term investments, net
Long-term investments of the Company relate to investment of RMB50 million (approximately $
Long-term investments, net of impairment, are as follows:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Long-term investments |
| $ |
|
| $ |
| ||
Less: impairment |
|
| ( | ) |
|
| ( | ) |
Total |
|
|
|
| $ |
| ||
An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. As of March 31, 2026 and September 30, 2025, impairment for long-term investments was $
Note 9 — Loan to a third party
The loan to a third party relates to a three-year $
Note 10 — Security deposits
Security deposits relate to rental deposits paid to two third-party landlords for leasing warehouse spaces. These leases have expiry dates ranging from June 2030 to January 2031.
Note 11 — Property and equipment, net
Property and equipment, stated at cost less accumulated depreciation, consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Machinery and equipment |
| $ |
|
|
|
| ||
Transportation equipment |
|
|
|
|
|
| ||
Office equipment |
|
|
|
|
|
| ||
Subtotal |
|
|
|
|
|
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Total |
| $ |
|
| $ |
| ||
Depreciation expense was $
| F-25 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12— Promissory note
On July 30, 2024, the Company entered into a note purchase agreement (the “Purchase Agreement”) with Atlas Sciences, LLC, a Utah limited liability company (the “Investor”), pursuant to which
The Note bears interest at a rate of
The foregoing descriptions of the Purchase Agreement and the Note are summaries of the material terms of such agreements and do not purport to be complete and are qualified in their entirety by reference to the form of the Purchase Agreement and the Note.
For the six months ended March 31, 2026, neither ordinary share was issued nor payment was made for the repayment of the Note. For the six months ended March 31, 2025,
For the six months ended March 31, 2026 and 2025, the interest expense of the Note was $
Note 13 — Other current liabilities
Other current liabilities consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Accrued expenses |
| $ |
|
| $ |
| ||
Contract liabilities |
|
|
|
|
|
| ||
Security deposits |
|
|
|
|
|
| ||
Taxes payable |
|
|
|
|
|
| ||
Interest payable |
|
|
|
|
|
| ||
Salaries payable |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
Note 14 — Long-term loan
Long-term loan consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
Long-term loan, non-current portion |
| (unaudited) |
|
| (audited) |
| ||
Xinmao Group Co., Ltd. |
|
|
|
| $ |
| ||
Total long-term loan, non-current portion |
|
|
|
| $ |
| ||
The following table summarizes the loan commencement date, loan maturity date, and the effective annual interest rate of the unsecured long-term loan:
|
| Loan |
| Loan |
| Effective |
|
|
| |||
|
| commencement |
| maturity |
| interest |
|
|
| |||
Long-term loans, non-current portion |
| date |
| date |
| rate |
|
| Note |
| ||
Xinmao Group Co., Ltd. |
|
|
|
| % |
|
| 1 |
| |||
1. | On January 1, 2024, the Company entered into a revolving loan of $ |
For the six months ended March 31, 2026 and 2025, the interest expense was $
| F-26 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 15 — Shareholders’ equity
Ordinary shares
Farmmi, Inc. (the “Company”) convened its extraordinary general meeting of shareholders on December 5, 2025, and passed special resolutions that
1. | The authorized shares, and the issued and outstanding shares, of the Company be reclassified and redesignated into Class A Ordinary Shares and Class B Ordinary Shares (the “Redesignation”); |
|
|
2. | The Fourth Amended and Restated Memorandum and Articles of Associations of the Company be adopted (the “Amended and Restated Memorandum and Articles”); |
|
|
3. | The authorized share capital of the Company be amended from |
|
|
| The terms of, and rights attaching to the Class A Ordinary Shares and the Class B Ordinary Shares will be materially identical to the existing Ordinary Shares of par value US$2.40 each in the capital of the Company save that the Class B Ordinary Shares: (i) shall have 50 times the voting rights per share of Class A Ordinary Shares, and (ii) shall be convertible into Class A Ordinary Shares, as provided in the Fourth Amended and Restated Memorandum and Articles of Association. |
|
|
4. | Simultaneously with the Redesignation, the Ordinary Shares in the Company issued and outstanding be redesignated as follows: |
| - | all the existing authorized and issued Ordinary Shares of the Company be redesignated as Class A Ordinary Shares save for 3,873 Ordinary Shares issued and currently registered in the name of Farmnet Limited; and |
| - | the 3,873 Ordinary Shares held by Farmnet Limited be redesignated as 3,873 Class B Ordinary Shares. |
The Company convened an extraordinary general meeting of shareholders on February 24, 2026, and passed a special resolution that, subject to and conditional upon compliance at all times with the Companies Act of the Cayman Islands (Revised) in respect of the Capital Reduction, the authorized share capital of the Company be reduced from
The Capital Reduction has taken effect following the registration of the Special Resolution with the Cayman Islands Registrar of Companies on February 24, 2026.
For the six months ended March 31, 2026,
| F-27 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended March 31, 2025,
Statutory reserve
The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).
Appropriations to the statutory surplus reserve are required to be at least
Warrants
2024 warrants - Series A
On August 22, 2024, Farmmi and certain institutional purchasers entered into a securities purchase agreement, pursuant to which the Company agreed to sell to such purchasers an aggregate of
2025 warrants - Series C
On August 4, 2025, the Company entered into a definitive securities purchase agreement, (the "Purchase Agreement") with certain accredited investors (“Selling Shareholders”), pursuant to which the Company offered to sell to the Selling Shareholders an aggregate of
The following tables summarize the warrants issued, outstanding, and expired as of and for the six months ended March 31, 2026 and for the year ended September 30, 2025.
|
|
|
| Exercised |
| |||
|
| Warrants |
|
| price |
| ||
Warrants outstanding, as of September 30, 2024 |
|
|
|
| $ |
| ||
Issued |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
Expired |
|
| - |
|
|
|
| |
Warrants outstanding, as of September 30, 2025 |
|
|
|
| $ |
| ||
Issued |
|
| - |
|
|
|
| |
Exercised |
|
| ( | ) |
| $ |
| |
Expired |
|
| - |
|
|
|
| |
Warrants outstanding, as of March 31, 2026 |
|
|
|
| $ |
| ||
Warrants exercisable, as of March 31, 2026 |
|
|
|
| $ |
| ||
|
|
|
|
|
| Remaining | |||||
|
| Warrant |
|
| Exercise |
|
| contractual | |||
Warrants Outstanding |
| exercisable |
|
| price |
|
| life | |||
2024 warrants -Series A |
|
|
|
| $ |
|
| ||||
| F-28 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 16 — Concentration of major customers and suppliers
For the six months ended March 31, 2026, one major customer accounted for approximately
As of March 31, 2026, one major customer accounted for approximately
For the six months ended March 31, 2026, five major suppliers accounted for approximately
As of March 31, 2026, three major suppliers accounted for approximately
| F-29 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 17 — Leases
The Company rents (i) its factories in Lishui City, Zhejiang Province from a related party, Zhejiang Tantech Bamboo Technology Co., Ltd, for processing dried edible fungi; (ii) a floor in an office building in Hangzhou from a third party; and (iii) three warehouses in the USA.
As of March 31, 2026 and September 30, 2025, the remaining average lease term was an average of
Supplemental balance sheet information related to operating leases was as follows:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
Right-of-use assets under operating leases |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Operating lease liabilities, current |
|
|
|
|
|
| ||
Operating lease liabilities, non-current |
|
|
|
|
|
| ||
Total operating lease liabilities |
| $ |
|
| $ |
| ||
|
| As of |
| |
|
| March 31, |
| |
For the years ending September 30, |
| 2026 |
| |
For the remaining months of fiscal year 2026 |
| $ |
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
2030 |
|
|
| |
Thereafter |
|
|
| |
Total future minimum lease payments |
|
|
| |
Less: Imputed interest |
|
| ( | ) |
Total |
| $ |
| |
| F-30 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 18 — Segment reporting
In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making Company, in deciding how to allocate resources and in assessing performance. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s CODM has been identified as the chief executive officer (the “CEO”), who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company.
The Company currently has three main products from which revenue is earned and expenses are incurred: shiitake mushrooms, mu er fungus, and other edible fungi and other agricultural products. The operations of these product categories have similar economic characteristics. In particular, the Company uses the same or similar production processes, sells to the same or similar type of customers, and uses the same or similar methods to distribute these products. The resources required by these products share high similarity. Switching cost between different products is minimal. Production is primarily determined by sales orders received and market trends. Therefore, management, including the chief operating decision maker, primarily relies on the revenue data of different products in allocating resources and assessing performance. Based on management’s assessment, the Company has determined that it has only two operating segments and therefore two reportable segments as defined by ASC 280. Since June 2021, the Company’s operations have expanded into bulk agricultural commodity trading, such as cotton and corn bulk trading. The Company obtains control over these commodities as a principal from its suppliers before selling these commodities to its customers. To implement global expansion strategy and meet the growing customer demand, the Company launched its warehouse and logistics services business in the U.S. in the summer of 2024, with the aim to develop a food and agricultural product supply chain system. In July 2024,
Revenue disaggregation
Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard. Revenue under the segment reporting standard is measured on the same basis as under the revenue standard. The Company’s disaggregation of revenue for the six months ended March 31, 2026 and 2025, respectively:
|
| For the Six Months Ended March 31, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Revenue recognition at a point in time |
| (unaudited) |
|
| (unaudited) |
| ||
Sales of agricultural products |
|
|
|
|
|
| ||
Shiitake |
| $ |
|
| $ |
| ||
Mu Er |
|
|
|
|
|
| ||
Other products |
|
|
|
|
|
| ||
Agricultural products trading business |
|
|
|
|
|
|
|
|
Corn |
|
|
|
|
|
| ||
Logistic services |
|
|
|
|
|
|
|
|
Operation services |
|
|
|
|
|
| ||
Special work order services |
|
|
|
|
|
| ||
Sub-total |
|
|
|
|
|
| ||
Revenue recognition over time |
|
|
|
|
|
|
|
|
Logistic services |
|
|
|
|
|
|
|
|
Outbound delivery services |
|
|
|
|
|
| ||
Storage services |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
|
| For the Six Months Ended March 31, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (unaudited) |
| ||
Products revenue |
| $ |
|
| $ |
| ||
Services revenue |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
| F-31 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Revenue by geographical segment for the six months ended March 31, 2026 and 2025:
For the Six Months Ended March 31, | ||||||||
2026 | 2025 | |||||||
(unaudited) | (unaudited) | |||||||
PRC | $ | $ | ||||||
United States of America | ||||||||
Total | $ | $ | ||||||
|
| For the Six Months Ended March 31, 2026 |
| |||||||||
|
| USA |
|
| PRC |
|
| Total |
| |||
Revenues |
| $ |
|
| $ |
|
| $ |
| |||
Cost of revenues |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Gross (loss) profit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Operating expenses |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Loss from operations |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Other income (expenses) |
|
|
|
|
| ( | ) |
|
|
| ||
Loss before income taxes |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Income tax expenses |
|
|
|
|
|
|
|
|
| |||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
For the Six Months Ended March 31, 2025 | ||||||||||||
USA | PRC | Total | ||||||||||
Revenues | $ | $ | $ | |||||||||
Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
Gross (loss) profit | ( | ) | ||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ||||||
(Loss) income from operations | ( | ) | ( | ) | ||||||||
Other income (expenses) | ( | ) | ||||||||||
(Loss) income before income taxes | ( | ) | ( | ) | ||||||||
Income tax expenses | ||||||||||||
Net (loss) income | $ | ( | ) | $ | $ | ( | ) | |||||
As of March 31, 2026 and September 30, 2025, the Company’s long-lived assets are located in PRC and the United States of America:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
| (unaudited) |
|
| (audited) |
| ||
United States of America |
| $ |
|
| $ |
| ||
PRC |
|
|
|
|
|
| ||
Total long-lived assets |
| $ |
|
| $ |
| ||
| F-32 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 19 — Related party transactions
The relationship and the nature of related party transactions are summarized as follows:
Name of related party | Relationship to the Company | Nature of transactions |
Zhejiang Tantech Bamboo Technology Co., Ltd | Under common control of Mr. Zhengyu Wang and Ms. Yefang Zhang, CEO of the Company | Lease factory building to the Company and charging water and electricity for offices leased to the Company. |
Yefang Zhang | Chief Executive Officer of the Company | Payment of expenses for the Company. |
Zhengyu Wang | Mr. Zhengyu Wang is Ms. Yefang Zhang's husband | Non-competition agreement |
Centurynew USA Inc | CEO Yefang Zhang controls the company. | Payment of expenses for the Company. |
Epakia Inc. | A Subsidiary of Tantech Holdings Ltd Group. Yefang Zhang serves as a Chairwoman of the board of directors of Tantech Holdings Ltd | Payment of expenses for the related party |
Due from a related party
Due from a related party consisted of the following:
|
|
| As of |
|
| As of |
| |||
|
|
| March 31, |
|
| September 30, |
| |||
|
|
| 2026 |
|
| 2025 |
| |||
Due from related parties |
| Name of related parties |
| (unaudited) |
|
| (audited) |
| ||
Other receivables |
| Epakia Inc. |
| $ |
|
|
|
| ||
Total |
|
|
| $ |
|
|
|
| ||
Amount due from Epakia Inc. was related to payment of expenses on behalf of a related party. Amount was due on demand and non-interest bearing.
Due to related parties
Due to related parties consisted of the following:
|
|
| As of |
|
| As of |
| |||
|
|
| March 31, |
|
| September 30, |
| |||
|
|
| 2026 |
|
| 2025 |
| |||
Due to related parties |
| Name of related parties |
| (unaudited) |
|
| (audited) |
| ||
Other payable |
| Centurynew USA Inc |
| $ |
|
|
|
| ||
Other payable |
| Yefang Zhang |
|
|
|
| $ |
| ||
Other payable |
| Zhejiang Tantech Bamboo Technology Co., Ltd. |
|
|
|
|
|
| ||
Total |
|
|
| $ |
|
| $ |
| ||
Amount due to Centurynew USA Inc and Yefang Zhang was related to payment of expenses by related parties for the Company. Amounts were due on demand and non-interest bearing.
Amount due to Zhejiang Tantech Bamboo Technology Co., Ltd. was related to lease, water and electricity expenses for offices leased to the Company.
Sales to related parties
The Company periodically sells merchandise to its affiliates during the ordinary course of business. For the six months ended March 31, 2026, and 2025, the Company recorded sales to related parties of nil and $
Operating leases from related parties
The following table summarizes operating leases with related party, Zhejiang Tantech Bamboo Technology Co., Ltd, detailing lease begin date, lease end date, leasing purpose, leasing area in square meters, and annual rent in RMB and its equivalent in USD.
Zhejiang Tantech Bamboo Technology Co., Ltd. |
| Lease No 1 |
| |
Lease begin date |
|
| ||
Lease end date |
|
| ||
Leasing purpose |
|
| ||
Annual rent in RMB |
|
|
| |
Annual rent in USD |
| $ |
| |
Area (in square meters) |
|
|
| |
For the six months ended March 31, 2026, and 2025, the Company incurred lease expenses of $
Non-Competition Agreement
The Company and Forasen Group signed a Non-Competition Agreement which provides that Forasen Group should not engage in any business that the Company engages in, except purchasing products from us. In addition, Mr. Wang and Ms. Zhang signed a Non-Competition Agreement with the Company and Tantech which provides that Mr. Wang and Ms. Zhang shall not vote in favor or otherwise cause Tantech to engage in the business that the Company conducts.
| F-33 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 20 — Subsequent events
Management has reviewed events occurring through the date the unaudited condensed consolidated financial statements were issued and, except as disclosed elsewhere in the unaudited condensed consolidated financial statements, no subsequent events occurred that require accrual or disclosure, except for:
1. | On June 15, 2026, the Company completed an exercise price adjustment to the outstanding Series A warrant pursuant to the provisions of such warrants. Following such exercise price adjustment, there are | ||||
|
| ||||
2. | On June 16, 2026, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to issue and sell to such purchasers, in a registered direct offering, an aggregate of | ||||
|
| ||||
3. | On June 29, 2026, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp., as the sole underwriter (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter, in a underwritten public shelf takedown offering, an aggregate of | ||||
|
| ||||
4. | The Company entered into an exchange agreement with Atlas Sciences, LLC on April 13, 2026, August 11, 2026, August 14, 2026, and August 17, 2026, respectively. Pursuant to each agreement, the parties agreed to partition a new promissory note (each, a “New Note”) from the promissory note the Company issued to Atlas Sciences on July 30, 2024, in the original principal amount of $ | ||||
| F-34 |
EXHIBIT 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes that appear elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors. Forward-looking statements speak only as of the date of this report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our annual report on Form 20-F in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. All statements contained in this report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
| 1 |
Results of Operations for the Six Months Ended March 31, 2026 and 2025
The following table summarizes our results of operations for the six months ended March 31, 2026 and 2025:
|
|
| For the Six Months Ended March 31, |
|
| Variance |
| ||||||||||
|
|
| 2026 |
|
| 2025 |
|
| Amount |
|
| % |
| ||||
| Revenue |
| $ | 6,394,713 |
|
| $ | 16,144,309 |
|
| $ | (9,749,596 | ) |
| (60.4) | % | |
| Cost of revenues |
|
| (7,484,087 | ) |
|
| (15,329,735 | ) |
|
| (7,845,648 | ) |
| (51.2) | % | |
| Gross (loss) profit |
|
| (1,089,374 | ) |
|
| 814,574 |
|
|
| (1,903,948 | ) |
| (233.7) | % | |
| (Allowance for) reversal of allowance for credit losses |
|
| (29,065,008 | ) |
|
| 270,832 |
|
|
| 29,335,840 |
|
|
| 10,831.7 | % |
| Long-term investment impairment loss |
|
| (7,044,116 | ) |
|
| - |
|
|
| 7,044,116 |
|
|
| - |
|
| Selling and distribution expenses |
|
| (311,446 | ) |
|
| (83,321 | ) |
|
| 228,125 |
|
|
| 273.8 | % |
| General and administrative expenses |
|
| (1,017,017 | ) |
|
| (1,670,829 | ) |
|
| (653,812 | ) |
| (39.1) | % | |
| Loss from operations |
|
| (38,526,961 | ) |
|
| (668,744 | ) |
|
| (37,858,217 | ) |
| (5,661.1) | % | |
| Interest income |
|
| 23,380 |
|
|
| 3,622 |
|
|
| 19,758 |
|
|
| 545.5 | % |
| Interest expense |
|
| (96,907 | ) |
|
| (231,704 | ) |
|
| (134,797 | ) |
| (58.2) | % | |
| Amortization of debt issuance costs |
|
| - |
|
|
| (177,014 | ) |
|
| (177,014 | ) |
| (100.0) | % | |
| Loss from equity method investment |
|
| - |
|
|
| (431,180 | ) |
|
| (431,180 | ) |
| (100.0) | % | |
| Other income, net |
|
| 1,010,067 |
|
|
| 1,003,031 |
|
|
| 7,036 |
|
|
| 0.7 | % |
| Gain on disposal of subsidiaries |
|
| - |
|
|
| 250,331 |
|
|
| (250,331 | ) |
| (100.0) | % | |
| Loss before income taxes |
|
| (37,590,421 | ) |
|
| (251,658 | ) |
|
| 37,338,763 |
|
|
| 14,837.1 | % |
| Income tax expenses |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Net loss |
| $ | (37,590,421 | ) |
| $ | (251,658 | ) |
| $ | 37,338,763 |
|
|
| 14,837.1 | % |
Revenues
Revenue is generated from processing, distributing, and trading dried Shiitake mushrooms, Mu Er (also known as Auricularia heimuer or black ear fungus), other edible fungi, other agricultural products trading business (e.g., tapioca, corn, cotton, and cornstarch), and logistic services.
The trading of agriculture products (e.g., corn, and red dates) was mainly based on market opportunity of matching suppliers and customers. Hence, the sales volume may fluctuate according to market demand and supply, and there is no pattern of such agriculture product trading.
| 2 |
The following table sets forth the breakdown of our revenues for the six months ended March 31, 2026 and 2025, respectively:
| For the Six Months Ended March 31, | Variance | |||||||||||||||||||||||
| 2026 | % | 2025 | % | Amount | % | |||||||||||||||||||
| Shiitake | $ | 1,854,057 | 29.0 | % | $ | 6,668,963 | 41.3 | % | $ | (4,814,906 | ) | (72.2 | )% | |||||||||||
| Mu Er | 1,846,572 | 28.9 | % | 5,255,756 | 32.6 | % | (3,409,184 | ) | (64.9 | )% | ||||||||||||||
| Logistic services | 2,694,084 | 42.1 | % | 3,407,535 | 21.1 | % | (713,451 | ) | (20.9 | )% | ||||||||||||||
| Corn | - | - | 782,946 | 4.8 | % | (782,946 | ) | (100.0 | )% | |||||||||||||||
| Other edible fungi | - | - | 29,109 | 0.2 | % | (29,109 | ) | (100.0 | )% | |||||||||||||||
| Total revenue | $ | 6,394,713 | 100.0 | % | $ | 16,144,309 | 100.0 | % | $ | (9,749,596 | ) | (60.4 | )% | |||||||||||
Total revenues for the six months ended March 31, 2026 decreased by $9.7 million, or 60.4%, to approximately $6.4 million from approximately $16.1 million for the same period of the prior fiscal year.
Revenue from sales of Shiitake decreased by $4.8 million, or 72.2%, to $1.9 million for the six months ended March 31, 2026 from $6.7 million for the same period of last year. This decline was primarily driven by reduced market demand for shiitake, which led to lower customer order volumes and a corresponding drop in sales quantity.
Revenue from sales of Mu Er decreased by $3.4 million, or 64.9%, to $1.8 million for the six months ended March 31, 2026 from $5.3 million for the same period of last year. This decline was primarily driven by reduced market demand for Mu Er, which led to lower customer order volumes and a corresponding drop in sales quantity.
Revenue from logistic services decreased by $0.7 million, or 20.9%, to $2.7 million for the six months ended March 31, 2026 from $3.4 million for the same period of last year. Commencing in December 2024, substantially all logistics revenue was generated from the “one-piece shipping service” executed under the December 12, 2024 Overseas Warehouse Distribution Service Agreement with an unrelated third party. Under this arrangement, the Company provides end-to-end overseas warehousing and fulfillment services supported by a rented third-party-developed Warehouse Management System (WMS), which enables core capabilities across inventory governance, order orchestration, settlement reconciliation, and delivery lifecycle tracking. The period-over-period revenue variance is driven principally by diminished market operational activity, which has resulted in contracted customer order flow and a corresponding decline in total logistics throughput.
Revenue from sales of corn decreased by $0.8 million, or 100%, to nil for the six months ended March 31, 2026 from $0.8 million for the same period of last year. The decrease was mainly attributable to no such trading of corn for the six months ended March 31, 2026, while there was trading of corn for the same period of last year.
Revenue from sales of other edible fungi decreased by $29,109, or 100%, to nil for the six months ended March 31, 2026 from $29,109 for the same period of last year, mainly due to the decreased sales volume arising from reduced market demand for other edible fungi which resulted in a decrease of customer orders.
| 3 |
Cost of Revenues
The following table sets forth the breakdown of the Company’s cost of revenues for the six months ended March 31, 2026 and 2025, respectively:
| For the Six Months Ended March 31, | Variance | |||||||||||||||||||||||
| 2026 | % | 2025 | % | Amount | % | |||||||||||||||||||
| Shiitake | $ | 1,685,326 | 22.5 | % | $ | 5,890,949 | 38.5 | % | $ | (4,205,623 | ) | (71.4 | )% | |||||||||||
| Mu Er | 1,663,822 | 22.2 | % | 4,683,022 | 30.5 | % | (3,019,200 | ) | (64.5 | )% | ||||||||||||||
| Logistic services | 4,134,939 | 55.2 | % | 3,953,543 | 25.8 | % | 181,396 | 4.6 | % | |||||||||||||||
| Corn | - | - | 782,623 | 5.1 | % | (782,623 | ) | (100.0 | )% | |||||||||||||||
| Other edible fungi | - | - | 19,598 | 0.1 | % | (19,598 | ) | (100.0 | )% | |||||||||||||||
| Total | $ | 7,484,087 | 99.9 | % | $ | 15,329,735 | 100.0 | % | $ | (7,845,648 | ) | (51.2 | )% | |||||||||||
Cost of revenues decreased by $7.8 million, or 51.2%, to $7.5 million for the six months ended March 31, 2026 from $15.3 million for the same period of last year. As illustrated in the table above, the decrease was mainly attributable to the decrease in sales of shiitake and Mu Er and no trading of corns or other agricultural products, and the decrease was partially offset by the increase of $0.2 million in the cost of revenues associated with logistic services which related to “one piece shipping service” since December 2024 whereby the Company provides overseas warehousing services, final logistics services, and other related value-added services in Chino, California.
| 4 |
Gross Profit
The following table sets forth the breakdown of gross (loss) profit for the six months ended March 31, 2026 and 2025, respectively:
|
|
| For the Six Months Ended March 31, |
|
| Variance |
| ||||||||||||||||||
|
|
| 2026 |
|
| % |
|
| 2025 |
|
| % |
|
| Amount |
|
| % |
| ||||||
| Shiitake |
| $ | 168,731 |
|
|
| (15.5 | )% |
| $ | 778,014 |
|
|
| 95.5 | % |
| $ | (609,283 | ) |
|
| (78.3 | )% |
| Mu Er |
|
| 182,750 |
|
|
| (16.8 | )% |
|
| 572,734 |
|
|
| 70.3 | % |
|
| (389,984 | ) |
|
| (68.1 | )% |
| Logistic services |
|
| (1,440,855 | ) |
|
| 132.3 | % |
|
| (546,008 | ) |
|
| (67.0 | )% |
|
| (894,847 | ) |
|
| (363.9 | )% |
| Corn |
|
| - |
|
|
| - |
|
|
| 323 |
|
|
| 0.0 | % |
|
| (323 | ) |
|
| (100.0 | )% |
| Other edible fungi |
|
| - |
|
|
| - |
|
|
| 9,511 |
|
|
| 1.2 | % |
|
| (9,511 | ) |
|
| (100.0 | )% |
| Total |
| $ | (1,089,374 | ) |
|
| 100.0 | % |
| $ | 814,574 |
|
|
| 100.0 | % |
| $ | (1,903,948 | ) |
|
| (233.7 | )% |
Overall gross profit decreased by $1.9 million, or 233.7%, to a gross loss of $1.1 million for the six months ended March 31, 2026 from a gross profit of $0.8 million for the same period of last year. The decrease in gross profit was mainly attributable to gross loss incurred by logistic services due to gestation period of aforementioned “one piece shipping service” commenced since December 2024, and gross profits of shiitake and Mu Er reduced by $0.6 million and $0.4 million as competitive market reduced gross margins for both shiitake and Mu Er, respectively.
(Allowance for) reversal of allowance for credit losses
Allowance for credit losses increased by approximately $29.1 million, from a $0.3 million reversal in the prior-year period to a $29.1 million expense in the current period. The increase was mainly attributable to allowance of approximately $31.7 million for advances to suppliers. During the six months ended March 31, 2026, the Company reassessed the recoverability of its advances to suppliers in connection with management’s decision to substantially reduce and exit certain operations in the PRC. Prior to this decision, the Company expected to utilize the advances through future purchases of agricultural products from the relevant suppliers. Following the strategic decision, which was finalized subsequent to the issuance of the Company’s financial statements for the year ended September 30, 2025, the Company no longer expected to utilize a significant portion of these advances through future purchases. Accordingly, the Company evaluated the amounts expected to be recovered from the suppliers and recognized an additional allowance of approximately $31.7 million during the six months ended March 31, 2026 for amounts determined not to be recoverable, as partially offset by reversal of allowance for credit losses of $2.7 million in accounts receivable due to collection of aged accounts receivable.
Long-term investment impairment loss
Long-term investment impairment loss was approximately $7.0 million for the six months ended March 31, 2026, compared to nil for the same period of 2025. The impairment was primarily attributable to changes in management’s expectations regarding the recoverability of the investment in connection with a significant reduction in the Company’s core business activities in the PRC and management’s strategic decision to substantially reduce and exit certain operations in the PRC. As a result, the Company determined that the decline in value of the investment was other than temporary and recognized an impairment loss during the period.
Selling and distribution expenses
Selling and distribution expenses increased by $0.2 million, or 273.8%, to $0.3 million for the six months ended March 31, 2026 from $83,321 for the same period of last year. The increase was primarily attributable to the commission and fees incurred for the “one piece shipping service” since December 2024.
General and administrative expenses
General and administrative expenses decreased by $0.7 million, or 39.1%, to approximately $1.0 million for the six months ended March 31, 2026 from $1.7 million for the same period of last year. The decrease was primarily attributable to the cost cutting initiatives by the Company which reduced the general and administrative expenses.
| 5 |
Interest expense
Interest expense decreased by $0.1 million, or 58.2%, to $0.1 million for the six months ended March 31, 2026 from $0.2 million for the same period of last year. The interest expenses incurred for the six months ended March 31, 2026 were primarily attributable to interest expenses incurred by promissory notes and long-term loans. This reduction is principally driven by the lower outstanding balance of promissory notes, which resulted in a corresponding decrease in the associated interest expense.
Amortization of debt issuance costs
Amortization of debt issuance costs decreased by $0.2 million, or 100%, to nil for the six months ended March 31, 2026 from $0.2 million for the same period of last year. On July 30, 2024, the Company and Atlas Sciences, LLC (“Atlas”) entered into a note purchase agreement. Pursuant to the agreement, the Company agreed to issue to Atlas an unsecured promissory note in the original principal amount of $5,355,000 for $5,000,000 in gross proceeds. The resulting debt discount was amortized on a straight-line basis over the contractual term of the promissory note and was fully recognized in fiscal year 2025. Accordingly, no corresponding amortization of debt issuance costs was recorded for the six months ended March 31, 2026.
Loss from equity method investment
On February 28, 2024, Farmmi International Limited (“Farmmi International” or the “Buyer”), a wholly-owned subsidiary of the Company, entered into an equity transfer agreement with Malong Limited, a Hong Kong company (the “Seller”) to acquire a 45% equity of Ewayforest Group Limited (the “Target”), a Hong Kong company and a wholly owned subsidiary of the Seller. The Target owns 100% of the equity of Lishui Ganglisen Enterprise Management Co., Ltd, a Chinese company, which in turn owns 100% of the equity of Lishui Senbo Forestry Co., Ltd, a Chinese company (“Senbo Forestry”). Senbo Forestry is engaged in forestry management, improvement, planting and product sales. The Target had an appraised value of approximately RMB1.6 billion (approximately $220.2 million) as of December 31, 2024 based on an asset appraisal report issued by an independent third-party appraisal firm.
Pursuant to the agreement, Farmmi International would pay a total purchase price of RMB723,324,150 ($99,676,733) for 45% of the Target’s equity (the “Equity”). The parties had agreed that the Buyer would pay $35 million in cash and $35 million in the form of accounts receivable by March 31, 2025, with the remaining purchase price of $29,085,500 to be settled by September 2025. The parties had further agreed the date on which the Seller received the first installment of the purchase price should be deemed the closing date of the transaction. Within one month after receiving the first installment of the purchase price, the Seller should complete the procedures for amending the Target’s articles of association and transferring the Equity. The Target was also required to have a two-member board of directors with one director appointed by each of the Buyer and the Seller. The agreement contains customary representations, warranties and covenants of the Buyer and the Seller, and is subject to certain customary closing conditions. However, due to Senbo Forestry’s inability to obtain a forest ownership certificate for its forest assets, the ownership of the relevant assets could not be confirmed. On September 30, 2025, Farmmi International and the Seller reached an agreement to terminate the original asset/equity acquisition transaction and to refund the consideration Farmmi International had previously paid. As a result, an equity investment loss of $431,180 was recognized for the six months ended March 31, 2025, whereas no such loss was incurred by the Company during the six months ended March 31, 2026.
Other income
Other income increased by $7,036, or 0.7%, to approximately $1.0 million for the six months ended March 31, 2026 from approximately $1.0 million for the same period of last year. Other income was mainly generated by the Company’s U.S. subsidiaries, which leased three warehouses in earning warehouse sublease rental income. There was no significant fluctuation in sublease rental income for the period concerned.
Gain on disposal of subsidiaries
On March 31, 2025, an agreement was signed to divest 100% interest in Farmmi Food and Farmmi Supply Chain to a third party for a total cash consideration of RMB20,000 ($2,754). The gain on disposal of these subsidiaries was $0.2 million for the six months ended March 31, 2025.
Net loss
As a result of the factors described above, net loss was $37.6 million and $0.3 million for the six months ended March 31, 2026 and 2025, respectively.
| 6 |
Liquidity and Capital Resources
We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC and U.S. subsidiaries to satisfy our liquidity requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of its after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.
Our ability to distribute dividends largely depends on earnings from our PRC subsidiaries and their ability to pay dividends out of earnings. The Company recorded a net loss of approximately $37.6 million for the six months ended March 31, 2026. The above matters raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As of March 31, 2026, the Company had cash balance of approximately $0.2 million.
Management plans to address the conditions that raise substantial doubt about the Company’s ability to continue as a going concern through (i) obtaining additional equity or debt financing and (ii) reducing cash used in operating activities. While the Company has successfully raised $8.8 million in gross proceeds through equity financings and reduced the principal balance of the July 2024 promissory note by approximately $0.6 million in the period after March 31, 2026, such changes in the Company’s liquidity condition may not be sufficient to completely remedy the existing going concern risk and cash requirements for its operations. Additionally, the Company may need additional capital in the future to fund its further expansion. If the Company determines that its cash requirements exceed the amount of cash it has on hand at the time, the Company may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to shareholders of the Company.
As of March 31, 2026, we had cash of $0.2 million. In assessing liquidity, management monitors and analyzes our cash on-hand, ability to generate sufficient revenue sources in the future, and operating and capital expenditure commitments.
As of March 31, 2026, the Company had working capital of approximately $63.5 million. The Company’s working capital requirements are influenced by the level of operations, revenue generated from products and services, costs and expenses controlled, encashment of accounts receivable.
The Company intends to finance future working capital requirements and capital expenditures from cash generated from operating activities and funds raised from financing activities. The Company may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions that the Company may decide to pursue. With the current working capital, the Company believes that the current cash together with cash generated from operating activities and financing activities will not be sufficient to meet the present anticipated working capital requirements and capital expenditures. If existing cash is insufficient to meet requirements, the Company may seek to issue debt or equity securities or obtain additional credit facilities. Financing may be unavailable in the amounts sufficient for the Company’s need or on terms acceptable to the Company, if at all. Issuance of additional equity securities, including convertible debt securities, would dilute earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict operations and ability to pay dividends to shareholders. If the Company is unable to obtain additional equity or debt financing as required, the Company’s business and prospects may suffer.
Indebtedness. As of March 31, 2026, we have $2.5 million promissory notes. Besides this indebtedness, we did not have any finance leases or purchase commitments, guarantees, or other material contingent liabilities.
Off-Balance Sheet Arrangements. We have not entered any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that we provide financing, liquidity, market risk, or credit support to or engage in hedging or research and development services with us.
Capital Resources. The primary drivers and material factors impacting our liquidity and capital resources include our ability to generate sufficient cash flows from our operations and renew commercial bank loans, as well as proceeds from equity and debt financing, to ensure our future growth and expansion plans.
| 7 |
Working Capital. Total working capital as of March 31, 2026 amounted to $63.5 million, compared to $83.2 million as of September 30, 2025.
Capital Needs. Our capital needs include our daily working capital needs and capital needs to finance the development of our business. We have established effective collection procedures of our accounts receivable and have been able to realize or receive the refund of the advances to suppliers in the past. The Company intends to address its liquidity needs through cash generated from operations and additional debt or equity financing. We may raise additional capital through public offerings or private placements to finance our business development and to consummate any merger or acquisition, if necessary. However, there can be no assurance that such financings or acquisition opportunities will be available on acceptable terms, or at all.
Cash flows
The following table provides detailed information about our net cash flows for the six months ended March 31, 2026 and 2025:
|
|
| For the Six Months Ended March 31, |
| |||||
|
|
| 2026 |
|
| 2025 |
| ||
| Net cash (used in) provided by operating activities |
| $ | (1,280,305 | ) |
| $ | 14,569,967 |
|
| Net cash used in investing activities |
|
| (3,016,796 | ) |
|
| (15,035,909 | ) |
| Net cash provided by financing activities |
|
| 3,741,228 |
|
|
| 875,208 |
|
| Effect of exchange rate changes on cash |
|
| 1,027 |
|
|
| (5,452 | ) |
| Net (decrease) increase in cash |
|
| (554,846 | ) |
|
| 403,814 |
|
| Cash and restricted cash, beginning of period |
|
| 804,098 |
|
|
| 486,522 |
|
| Cash and restricted cash, end of period |
| $ | 249,252 |
|
| $ | 890,336 |
|
Operating Activities
Net cash used in operating activities was $1.3 million for the six months ended March 31, 2026, as compared to net cash provided by operating activities of $14.6 million for the six months ended March 31, 2025, which mainly consisted of (i) net loss of $37.6 million; (ii) an increase of $3.9 million in accounts receivable due to sales; and (iii) a decrease in allowance for accounts receivable of $2.7 million due to collection from aged accounts receivable; this was partially offset by (i) a net decrease of $8.8 million in advances to suppliers due to allowance for credit losses for certain aged suppliers; and a decrease of $23.9 million in note receivable due to collection.
Investing Activities
For the six months ended March 31, 2026, net cash used in investing activities amounted to $3.0 million as compared to net cash used in investing activities of $15.0 million for the same period of 2025, which mainly consisted of loan of $3.8 million to a third party and purchase of $0.4 million in property and equipment, as partially offset by repayment of $1.2 million in loan to a third party.
Financing Activities
Net cash provided by financing activities amounted to $3.7 million for the six months ended March 31, 2026, as compared to net cash provided by financing activities of $0.9 million for the same period in 2025, which mainly consisted of proceeds of $3.6 million from advances from related parties and proceeds of $2.0 million from issuance of ordinary shares for warrants exercised, as partially offset by repayment of $1.8 million to a third-party loan.
Commitments and Contractual Obligations
The following table presents the Company’s material contractual obligations as of March 31, 2026:
|
|
|
|
| Less than |
|
| 1-2 |
|
| 3-5 |
|
| More than |
| ||||||
| Contractual obligations |
| Total |
|
| 1 year |
|
| years |
|
| years |
|
| 5 years |
| |||||
| Promissory notes |
| $ | 2,519,134 |
|
| $ | 2,519,134 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Operating lease obligations |
|
| 18,920,505 |
|
|
| 5,391,086 |
|
|
| 7,122,876 |
|
|
| 5,905,267 |
|
|
| 501,276 |
|
| Total |
| $ | 21,439,639 |
|
| $ | 7,910,220 |
|
| $ | 7,122,876 |
|
| $ | 5,905,267 |
|
| $ | 501,276 |
|
| 8 |